Reference no: EM133121993

Questions -

Q1. Ramon, Inc.'s value is $100,000,000, and the company does not have any debt as part of their capital structure. However, they do have $25,000,000 preferred shares outstanding. If the company has 2,000,000 shares outstanding, what should be Ramon In's share price?

Q2. Between 2000 and 2013, Hillary Investments has produced returns as follows:

2000: 8%

2010: 3%

2011: -1%

2012: -5%

2013: -3%

Calculate the expected return for Hillary Investments.

Q3. JB Hi Fi market risk is β = 1.2 and the rate on government bonds is 1.75%. Expected return on the market is 6.5%%. What is JB Hi Fi's cost of equity according to the CAPM?

Q4. Which of these is/are true regarding risk and return?

Statement I: Diversification is the process of removing systematic risk from a portfolio.

Statement II: In general, the greater the risk, the greater the return required by an investor.

Statement III: Investors should focus on real returns if they are concerned about the purchasing power of their wealth.

Select one:

a. Statements II and III only

b. Statements I and III only

c. Statement I only

d. Statements I and II only

Q5. You bought a Google, Inc. share for $42.50 at the beginning of the year. During the year, the share paid a $2.50 dividend and at the end of the year it traded at $55.65. What is the total return of your share investment (in percentage)?